Back to basics: the five best reasons for patenting your technology

Published on 24 Feb, 2012

Why should you patent your business’ technology? Many people think of the patent system simply as a means for restricting other parties from copying ideas. However, through modern business practices, there are a number of ways in which patent protection can benefit you and your business. Discussed here are five examples of how seeking patent protection for your technology can contribute to your business’ performance.

1. Strength in negotiations with other parties

Many sophisticated players will not consider negotiating with you regarding a technology if patent protection is not pending or in place for that technology. From their perspective, it is a risk management step; if you are not willing to put up money to protect your technology, then why should they believe it is technology of sufficient value in which to invest? Having granted or pending patent protection going into negotiations shows the other party that you place significant emphasis on the importance of the technology. It also reduces the temptation for the other party to recast or replicate the technology.

2. Market position

Filing a patent application for an invention and its commercial application is analogous to putting up a “keep off the grass” sign. Only, unlike land rights, patent rights have boundaries that are open to interpretation and, particularly for pending patent rights, yet to be finally settled upon. This lack of clarity and certainty can catch out the unwary, and sometimes also IP professionals. After publication of your patent application, which typically occurs about 18 months from filing, competitors may become aware of your technology. But generally those same competitors will not know with any certainty the scope of protection you may ultimately obtain from any subsequently granted patent. This uncertainty can be positive for you, in that competitors do not know exactly how close they can step to your technology before being exposed to the risk of infringement.

3. Marketing

In some respects, patents and patent applications can be considered a marketing tool. Particularly: patenting your technology shows other parties that you place significant importance in that technology. Making others aware of your patent portfolio can significantly increase the value of your business’ image, from the perspective of customers, shareholders and competitors. If your branding is intended to be synonymous with innovation, a sound and healthy patent portfolio should and does support that.

4. Revenue

Licensing your patent or patent application can provide a source of income for your business. While developing or manufacturing a technology in all jurisdictions or fields may be beyond the capability of your business, there is an opportunity to license some or all of the relevant technology to other interested parties who can then legally exploit that technology. By preparing a suitable license agreement, exploitation by the interested parties can provide a useful source of income without significant costs. Although licensing agreements are possible without granted or pending patent protection in place, this additional factor can help strengthen a licensee’s position to obtain a more favourable agreement.

5. Exclusivity

Possibly the most well-known reason to seek patent protection is to obtain exclusive rights to exploit your invention. Having a granted patent covering your technology gives you the right to prevent other parties from making, using or selling products that are sufficiently similar to your patented technology. For the life of the patent this provides you with a tool to enjoy a larger market share than would have otherwise been possible and can also allow for an increased margin for the sale of the product. These factors, in turn, should make it easier to then invest in the development of the next generation of products.

Of course there is a need to consider carefully the costs of securing protection for your intellectual property. Whilst there are a wide number of available strategies, and it is possible to contain costs, when it comes to patent protection it is generally the case that “you get what you pay for”.

Surprisingly, absent from the above reasons to patent is the ability to enforce your patent to seek damages from infringement. While this option is available, it is often the domain of the larger players due to the high costs involved in undertaking infringement proceedings. Well prepared SMEs can and do benefit from patent litigation, but it is rarely a smooth path and is certainly not recommended for the faint hearted.

For your business to take advantage of the performance possibilities mentioned above there is a prerequisite of effective planning of an IP strategy and the building and management of an IP portfolio to implement and support that strategy. From a more practical point of view, this will involve a consideration of the desired objectives (stronger market position, increased revenue etc) and the level of investment you are prepared to make to achieve that. It will simply not happen through chance.